When I noticed that three out of the seven July feature columns here at I.M. were about impending childbirth, I was at a loss. I’ve yet to experience children of my own. But, I figured I could still offer something probably every new parent can find relevant: making money go farther. With all those blasted child labor laws in effect, a parent hardly has any means to turn their little bundle of joys into a source of income. And, unless Congress votes to at least to extend just the middle-income “Bush tax cuts”, the tax credit for a new kid is not even going to be what it used to.
Straight truth, kids cost money.
And so, for you soon-to-be parents, as well as anyone else who would like their money to go a little farther these days, I offer a couple of real ways to stretch your dollars.
I’ve done one prior piece on saving money (See: here), where I discussed re-assessing your bank account, cheaper dvd rental, the benefits of comparison shopping online, and other budget strategies. I also revealed my love of sweet hot coffee drinks, like the Caramel Macchiato at Starbucks, and for the record, if anyone is listening over there at Gimme coffee, the day you got rid of your signature drinks (i.e. Crazy Fiona), you broke my heart a little. I’ll never love you quite the same.
But I digress... anyway, the tips in the prior article are still valid for consideration if you haven’t already, albeit, the dvd thing is a bit dated. With rental stores slowly dying out, including Hollywood Video shuttering both Ithaca stores this year, collective opportunities’ to waste money on video rentals is pretty much over. But besides the other old tips, here are two more things I’ve been doing that are effective, fairly painless, and that don’t involving finding and cutting coupons.
I’ll start by expanding on a topic touched on in the last piece, which dealt with my budget review revealing a larger than average portion of my spending going to food. Subsequent self inspection revealed that, above all others, the meal I seldom skip is lunch. On most occasions, it’s my first meal of the day. It’s one of the only generally accepted breaks in a workday. So why not treat yourself?
But spending a lot out on a nice lunch can be a small fortune. And at the same time, one shouldn’t have to eat poorly. “Value” meals may be so, but at what price?
In finding a good way to eat well but save on lunch, a recent piece on AOL’s “WalletPop” is a good place to start. The frozen meal plan is great when there are no leftovers. But, the part of the AOL piece I was most interested in was the sandwich part. I’ve known that I could make deli sandwiches daily for probably a little less than my frozen meals, but your typical everyday pre-packaged ham, turkey or roast beef package has become less and less appealing to me as a viable alternative. So, I was quite intrigued when the above reporter found that by purchasing meat by the pound and preparing it yourself, the savings was incredible vs. sliced deli choices. I was quick to expand on that idea in planning a lunch of Bahn Mi, a super flavorful Vietnamese pork sandwich (one recipe example here). I mean, just because you’re saving, doesn’t mean you have to eat lousy.
My second piece of advice: smart use of credit cards. You’re going to be buying a lot of diapers, and whatever else you aren’t given in any baby shower. You might as well make that spending go farther if you can. Credit cards can help – in the form of rewards.
My go-to card for purchases right now is the Diamond Preferred Rewards card from Citibank. No annual fee, and you earn points by using the card for each dollar spent. The points are traded for free stuff, most redeemed through Amazon.com, and include free shipping that is pretty efficient (i.e., faster than Amazon’s Super Saver Shipping, which often takes several days). I got my last rewards, sporting goods items and kitchen gadgets, just 3 days after redeeming online, and didn’t have to pay anything for shipping.
The thing is, when not properly used, credit cards can be a huge problem. So, I must give this advice coupled with caution.
Do use credit cards to pay for stuff you’re already buying anyway. This means, groceries, auto insurance, clothing, and other things you buy anyway. In addition to these, I have my Netflix account paid automatically paid using the Diamond card, and I get the points for stuff I was going to get anyway. Each of these items are (and should be) in your budget already, and you should pay the card balance off every thirty days when the statement is due.
Don’t use credit card to buy stuff “you were gonna buy anyway, but didn’t have the money yet.” This is an easy trap, believe me. But a several thousand dollar credit line shouldn’t mean “shopping spree” unless you can afford to pay it off quickly. Most cards won’t charge interest or fees if you pay off the balances every thirty days (check all of your card company’s terms and conditions). As such, (1) you accrue rewards points at no additional cost so long as you pay the balance each month, and (2) assuming you have an interest checking account, the money that stays in your account between the time of the actual purchase, and the time you have to pay for it will continue to accrue interest. Two for one!
There are other rewards card out there, and there are several website than can lead you to credit cards with all sorts of benefits. I’ll mention two other types that I actually use on occasion:
One is credit accounts affiliated with a particular store.
Target has a card that has no fee, that offers points on all purchases, plus double the points at Target stores and Target online shopping. I use it only at Target usually, but after 1000 points, you get a coupon for 10% off an entire day of shopping at Target. These 10% days tend to be big days for stocking up on cleaning supplies and paper products for us.
The other are a couple of gasoline company cards I keep. Gas cards tend to offer a few cents per gallon of gas off on your final monthly bill. This is only handy if you carry the same type card for the stations you use, but for a few bucks off per month, I have found it pretty easy to be choosy where I’m shopping for gas. It may only be a few bucks a month, but it all adds up. Over time, that savings could be a dent in a child's college account.
I hope these tips help, and I wish all of you who are expecting children have your expectations exceeded.
A practicing attorney and semi-professional musician, Walker writes for his own amusement, for the sake of opinion, to garner a couple of laughs, and to perhaps provoke a question or two, but otherwise, he doesn't think it'll amount to much.
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7.20.10 @ 9:26a
Nice column Jeff.
I can't reiterate enough your point about caution with credit cards. They are great, as long as you are spending within your means. If you don't have the money for something, that money isn't going to magically appear when the statement is due (and if it is, you are living paycheck to paycheck).
It is so important to pay credit cards on time, since interest rates can skyrocket on cards when you carry balances from month to month. Now student loans, that's another topic!
7.20.10 @ 9:31a
I made major mistakes in school w/ credit cards. I was like, "this will be no problem once I am working!" Well, it was a problem I could overcome, but it took several years to knock down the debt I built up in only a couple of years. No fun, indeed! It pays to buy things you can pay for now...
7.20.10 @ 1:08p
New parents should also look into the UPromise program right away. Nice way to stash some bucks for college.
The biggest lesson I remember from being in credit card debt is that I constantly paid more for everything because of the interest rate. What's the point of using coupons or shopping at the dollar store with a credit card when you have monster debt on it? Makes no sense.
Recently someone said to me, "Most of my credit card debt is medical bills." Honey, as long as you establish a payment plan with your doctor/hospital/whatever right away, you will never in a million years pay as much in interest to them as you will to a credit card company.
I put almost all my purchases on my Discover card. I pay it off every month, and get a hefty reward bonus at the end of the year that I often just roll back onto my bill. Now, merchants charge more to let you use Discover, so there's a bit of a markup somewhere, but since I make the majority of my purchases with it, I still think I come out ahead.